Among fintech verticals, digital payments reported the highest growth in 2020. With the global shift to digital payments, the traditional payment industry is all set to undergo a digital revolution. Let’s take a look at how well Europe is positioned to adapt to this change.
The global digital payment market exploded after the pandemic outbreak. There was a significant surge in the use of smartphones, thereby leading to extensive growth in the ecommerce market. European countries were a part of this change as millions of people opted for cashless payments over cash and credit cards.
According to a study by Finaria.itOpens a new window , Europe is expected to witness an overwhelming spike in digital payments this year. The transaction value is forecasted to surge by 28.3% to $1.17 trillion. This upward trend is expected to continue in years to come, with the entire industry reaching 1.95 trillion value by 2025.
Steady Growth in Digital Commerce
Over the last decade, technology has encroached on various industries, including the payment industry. With European consumers accepting cashless payments, the payment industry has seen a paradigm shift in the way it was traditionally operated — dominated by cash, credit cards, debit cards, or physical payment modes.
According to a survey by StatistaOpens a new window , the digital payments industry in Europe hit $668 billion in transaction value in 2017. The next two years saw this figure jump by 30% to $877.5 billion. This was a result of more users accepting real-time payments, mobile wallets, and P2P mobile payments.
Total Transaction Value in the Digital Payments Segment in Europe (2017-2025)
Source: Finaria.itOpens a new window
According to the survey, the pandemic hampered the overall growth of the digital commerce sector as soon as it hit the European markets in 2020. The transaction value rose by 4% year-over-year to $918.9bn in 2020.
That being said, the European digital payments industry is expected to witness even more growth in 2021 — the transaction value is slated to rise by more than $260 billion this year. As per Statista’s data, digital payments in Europe will grow by another $775 billion by 2025, which is more than the entire transaction value in 2018.
Digital commerce transactions, which are regarded as the market’s largest segment, dropped by 12% amidst the pandemic outbreak. As a result, their value fell from $767.7 billion in 2019 to $674.2 billion in 2020. However, this figure is expected to jump by 22% YoY to $823.6 billion in 2021 despite the outbreak hiccup. The European digital commerce industry is further expected to garner $1.12 Trillion value by 2025.
Mobile Payments to Hit $825.2 Billion Value by 2025
The mobile POS payments segment witnessed splendid growth amid the pandemic. Statistics highlight that mobile payments are forecasted to contribute 30% or almost $355.7 billion to the European digital payments value in 2021. This figure is 225% more compared to mobile POS payment’s contribution before the pandemic. With this upward trend, the entire segment is expected to grow by 130% in years to come and hit an $825.2 billion value by 2025.
Europe Shows a Significant Growth in Digital Payments
The U.K. is leading the digital payments market in Europe, with $271.4 billion worth of digital payments in 2021. According to the statistics, digital payments in the U.K. jumped by 40% since the COVID-19 outbreak, and by 2025, the transaction value is forecasted to jump by another 60% to $439 billion.
Second on the list of Europe’s largest digital payments markets is Germany, with a $178.2 billion transaction value in 2021 and a 14% increase within a couple of years. Following the growing adoption of digital payments, the German digital payments market is expected to hit $274.8 billion in value by 2025. Besides, according to the survey data, Germany also has the highest number of digital commerce users in Europe, i.e., close to about 62.4 million.
Number of Users in Digital Payments Market in Europe (2017-2025)
Source: Finaria.itOpens a new window
Third on the list of Europe’s largest digital payments market is France, where digital payments are set to grow by 26.7% YoY to $127.1 billion in 2021. This figure is expected to jump to almost $225 billion in the next four years.
Although all European countries are set to witness growth in digital payments in 2021, Italy and Spain are expected to witness substantial growth this year. The transaction values for these two markets are forecasted to rise by 32.7% and 32.3% year-over-year to $66.7 billion and $65.8 billion, respectively.
The statistical figures hint that Italian digital payments are set to double and hit almost $123 billion by 2025. On the other hand, the Spanish digital payments market’s transaction value is expected to jump by 60% to $105.1 billion in this period.
In conclusion
Digital payments have undergone a startling evolution over the past few years. COVID-19 has further accelerated the shift in payment preferences, with people opting for digital payments owing to its convenience. Irrespective of the reason, digital payments are here to stay and will continue to grow in popularity over the years, as observed across European countries and worldwide.Â
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